Oral Answers to Questions

Philip Hammond: My hon. Friend is absolutely right. The message that went out was that low interest rate easy credit would be with us for ever, and that it was safe to borrow far larger multiples of income and to draw equity from one's house in a way that, with the benefit of hindsight, was incredibly imprudent and ill-advised, and the Prime Minister will have to bear the responsibility for that message.
	Step one in developing an alternative framework to the discredited fiscal rules was to understand why the current fiscal rules so comprehensively failed to deliver, and step two was to analyse whether they could be fixed. The sustainable investment rule is the simpler of the two rules to deal with. It says that in every single year, net Government debt should remain below 40 per cent. of GDP. That is a rather unambitious target in the face of our rapidly ageing population and the Government's own long-term fiscal projections that show that if we do nothing, public spending will rise simply because of the demographic profile. The target takes no account of the need to put money aside for the future, and it has simply been broken, with current net debt at 43.3 per cent. of GDP and set to rise, and, as important, the use of off-balance sheet financing to conceal billions of pounds of private finance initiative debt alone makes it meaningless. Worse, the Government's determination to avoid being seen to breach the rule for as long as possible has led to a hugely costly distortion in public procurement as more and more projects have been forced into PFI structures, not because risk is being genuinely transferred, but so that capital spending can be financed off-balance sheet.
	The golden rule says that, over the cycle as a whole, borrowing should fund only capital expenditure, with current spending paid for from tax receipts. That is a perfectly sensible proposition, but it has not been delivered.

Philip Hammond: The hon. Gentleman will recall that the Government committed to bring a large amount of this PFI liability back on-balance sheet from this year and then, apparently for technical reasons, pushed things back by a year. It will now be next year that some, at least, of this stuff comes back on to the balance sheet. When we examine these large numbers—these large percentages of GDP—it is important to remember that we are seeing only part of the picture; another bit of the picture remains off the balance sheet at the moment.
	The golden rule has not been delivered on because this Government have consistently since 2001 overestimated tax receipts and underestimated the deficit, because the Chancellor has been allowed to mark his own scorecard and, crucially, because measuring compliance with the rule depends on the precise dating of the economic cycle, and that can be known only after the event—sometimes long after the event. In other words, the rule is backward-looking, while any credible judgment of fiscal sustainability must be forward-looking.
	Mervyn King has observed:
	"If you change your view of what happened seven or eight years ago"—
	that is to say, in the dating of the economic cycle—
	"it doesn't change the underlying fiscal position".
	Yet, such an approach may fundamentally change the apparent performance against the golden rule. So the golden rule is flawed not only in its implementation; it is flawed in principle. The Prime Minister's fiscal rules have failed the practicality test, because just as no sensible set of fiscal rules would suggest that Government borrowing and net public debt should not rise at a time of economic slowdown, so no sensible fiscal rule would allow us to arrive at such a time with borrowing bumping up close to the ceiling, leaving no room for counter-cyclical responses to the economic downturn and no room to help hard-pressed families and businesses, never mind for any additional measures that may be necessary to deal with the financial sector crisis.
	We have a failed fiscal framework, and we urgently need a replacement for the discredited fiscal rules if we are not to see the broader macro-economic policy framework undermined and the battle to contain inflation compromised. The Governor of the Bank gave a warning to the Treasury Committee:
	"The long-term risk...is that a fiscal framework that is not perceived by financial markets to be credible does put upward pressure on inflation expectations because it undermines the market's belief in the credibility of both the monetary and the fiscal frameworks."
	The evidence of the failure of the fiscal rules is here for all to see. That empirical evidence is consistent with the emerging academic consensus against rules-based systems on the basis of the empirical observation that, in practice, rules either tend to be too loose to be effective or so inflexible that Governments break them. While it might be possible in theory to design a rule that suggested the right response in all circumstances, such a rule would inevitably be too complex to operate in practice. So after careful consideration and consultation, our preference is for institutional reform to entrench fiscal stability. Last week, my hon. Friend the shadow Chancellor put forward our proposals for a new fiscal responsibility framework, as part of our plan for a strong economy.
	The framework will be at the heart of our economic policy. Its starting point will be that Governments, like the rest of us, must live within their means, not only because economic stability requires it, but because intergenerational fairness requires it. That will ensure that collectively we never make the same mistakes again, and in future all British Governments will be forced to fix the roof while the sun is shining. They will have to acknowledge that Governments cannot abolish the economic cycle, whatever Chancellors might like to claim, and will be forced to put something aside for the rainy day that will periodically come around.
	For anybody who has not studied the detailed proposals—I am sure that the Chief Secretary has done so—I will spell out what the next Conservative Government will do, in the event that this Government have not already adopted our policy. First, we will scrap the discredited fiscal rules, which are neither use nor ornament and, with the benefit of hindsight, never were.
	Secondly, we will introduce a tough, new, forward-looking mandate for the public finances at the end of a forecast horizon, with falling debt as a percentage of GDP and a balanced current budget, after adjusting for the economic cycle. Thirdly, and crucially, for the first time in Britain we will create an independent body accountable to Parliament, the office of budget responsibility, to publish independent forecasts and to assess the performance of Government against the outcomes it has specified.

Yvette Cooper: Thank you, Mr. Speaker. I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"notes that the purpose of the fiscal framework is to smooth the path of the economy in the short term, to secure sustainable public finances in the medium term and to ensure that spending and taxation impact fairly between generations; recognises the success of the framework over the past decade, reversing historical under-investment in the infrastructure of public services, reducing debt from 43 per cent. of GDP in 1997 to below 37 per cent. last year and allowing borrowing to increase this year in order to support the economy; welcomes the £4 billion of tax cuts helping families and businesses this year; further notes the turmoil in the world economy and financial markets; recognises that Government is rightly focused on the turbulence in the financial markets and helping families and businesses with the twin shocks of the credit crunch and high commodity prices; and welcomes the Government's commitment to take whatever steps are necessary to protect the stability of the financial system."
	This is the first Opposition day debate since the House returned after the events of the summer. Given the wider economic events that we have seen, it is perhaps a surprise that the Opposition have chosen to focus on the fiscal rules rather than on the overall events in the world economy. The House will have a chance on Thursday to discuss more widely the events in the economy, and we have also had yesterday's statement from the Chancellor.
	The fiscal position is of course affected by those major world events. The Chancellor's statement made it clear that we are continuing to see significant turbulence in the global financial markets, and there is also continuing pressure on financial institutions across the world. That pressure has been evident in Iceland today, and in other countries too.
	We have already provided support across the system, such as through the special liquidity scheme and the actions of the Bank of England, and we have also taken action on individual banks that have got into trouble—for example, in the cases of Bradford & Bingley and Northern Rock. It was unfortunate that Conservative Members opposed and continue to oppose the action on Bradford and Bingley and Northern Rock. Had we not stepped in to support those two institutions and to take action, there would have been massive consequences for the financial stability of the British banking system and serious problems for the economy, for the public finances and, in particular, pressure for individual savers across the country. It was right that we should step in to support them.
	As the Chancellor said yesterday, there has been considerable speculation about capital and the banking sector in recent days. In examining options for restoring stability to the banking sector, it is right that we look at every aspect—liquidity, capital and regulation—with other countries and, of course, with the financial sector itself. That process is continuing and we will update the House at the appropriate time.

Graham Stuart: Does the Chief Secretary now accept that liquidity rules were too loose in previous years, and that any changes made to the liquidity rules in future must ensure that they are not tightened at the wrong time?

Yvette Cooper: In fact, the action being taken by the Financial Services Authority is to look at the need for regulation on liquidity and not simply on solvency. Its report in the light of the events of last summer made that clear, and it is right that it should do so. We have needed to provide considerable additional liquidity support across the system. It is probably also right to say that there were not sufficient assessments of liquidity risks internationally and between countries, as well as the work that has been done by the FSA. Members on both sides of the House will recognise that events in the world financial markets have the potential to make a significant impact on the world economy, not just for the next few months but in many ways for years to come.
	In the circumstances, it is perhaps bizarre, and certainly irresponsible, for Opposition Members to try to pretend that the world economic events we are witnessing are simply a result of UK Government borrowing. In a recent interview, the shadow Chancellor said:
	"The causes of the problem are not the financial markets."
	The hon. Member for Runnymede and Weybridge (Mr. Hammond) has just told the House that lack of fiscal discipline is the root cause of the problems we face. That is economic illiteracy. Forget sub-prime lending in the US mortgage markets; forget the collapse of Lehman Brothers or the hugely complex bundling of toxic assets from the US; and forget the volatility in the money markets or the responsibility of international bankers. According to Opposition Members, the problem in the international markets is simply the level of UK Government borrowing and debt. I have to say that that view is utterly irresponsible and if Opposition Members do not understand the problem, they cannot be trusted to take the right decisions on how we deal with it and how we solve it to go forward.

Philip Hammond: So if the fiscal rules are so effective, can the right hon. Lady confirm that they are not about to be jumped?

Adam Price: I am not sure whether I suffer from the economic illiteracy to which the right hon. Lady so often refers, but perhaps she could help me out. As  The Times editorial pointed out yesterday, most independent commentators are predicting for the financial year beginning 2010 borrowing between £90 billion and £100 billion. Even the Institute for Fiscal Studies is quoting a figure of £60 billion, which is twice the figure that the Treasury is still maintaining. Surely the collapse in corporate tax receipts, which is an inevitable outcome of problems in the financial services sector, should be factored in, or is there something that I do not understand?

Yvette Cooper: The hon. Gentleman is right to say that the economy has an impact on the public finances so, for example, the reduction in receipts from stamp duty or from the financial sector will, of course, have an impact on tax revenues this year. We will set out the next forecast for borrowing and for the public finances at the pre-Budget report. As he knows, we do so twice a year as part of the Budget and as part of the pre-Budget report. That is the normal practice for reporting to the House and for ensuring that we have appropriate forecasting and fiscal stability in place.
	It is worth recognising, too, that the fiscal framework has protected public investment. Under the previous Government public investment reached a low of just 0.3 per cent. of GDP in 1988. As many of us know from our constituencies, that left a legacy of decaying public services and infrastructure. I remember that on one of my first visits to a primary school in my constituency, staff showed me where they put the buckets to catch the leaks from the Victorian roof, and I remember talking to the residents of one of the council estates in Pontefract, where they showed me the metal windows that rattled and the tiles that had blown off the roof—part of the £19 billion backlog of repairs and maintenance to Britain's council houses.
	The Conservative party did not fix the school roofs, the council house roofs or the hospital roofs. Under this Government, investment has grown by more than three times the 1997 level to 2.2 per cent. of GDP this year, and that sustained investment has allowed us to invest in the council homes, new hospitals, schools and transport infrastructure that we badly need. That is not just about mending the roof in the sunshine; it is about being still up there mending the roofs through rain, wind and stormy weather as well.

Peter Viggers: I have never risen to speak with more diffidence. This situation is extremely difficult, and I am anxious not to make it any worse. I went through the secondary banking crisis in the 1970s as a director of a merchant bank, and I am now on the Treasury Committee, having previously been a Parliamentary Private Secretary at the Treasury. Given that background, I want to make a contribution, and I hope that some of what I have to say is of some use or value.
	First, we must look at the background. The present Prime Minister, as Chancellor of the Exchequer, got three things right in 1997: first, we did not join the euro; secondly, he created the Monetary Policy Committee; and, thirdly, he decided to follow for some years the spending plans of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the previous Chancellor of the Exchequer. He also introduced the fiscal rules.
	The first fiscal rule is the golden rule that, over the economic cycle, the Government will borrow only to invest and not to fund current spending. The second is the sustainable investment rule, which states that public sector debt must be kept at a stable and prudent level and that, in most circumstances, net debt should be maintained below 40 per cent. of gross domestic product over the economic cycle.
	When I made my maiden speech in the House in the spring of 1974, I urged something even more extreme. I was a former director of an oil company with interests in the oil industry, and I proposed that the oil and gas reserves in the North sea were minerals and therefore a capital investment, and that any depletion of a capital investment should be made only if it were matched by spending. In other words, I argued that we should regard the oil and gas money not as revenue but as a depletion of capital. To that extent, I was even drier than the two fiscal rules introduced by the Chancellor of the Exchequer in 1997.
	There were two bad judgments in 1997. The first was the creation of the tripartite arrangements between the Treasury, the Financial Services Authority and the Bank of England, which were insufficiently clear and allowed the banking crisis to come upon us without sufficient recognition by the FSA. The removal of the supervisory role from the Bank of England was, in my opinion, a mistake. Through the Treasury Committee, I have urged that we should try to distinguish between the regulation of banks, which is the responsibility of the FSA, and the supervision of banks, which in my opinion should be the responsibility of the Bank of England, because only the Bank of England has the necessary close, hands-on ability to deal with banking problems. We are talking about the movement of the Governor of the Bank of England's eyebrows, and the quiet persuasion that the Bank is capable of exercising.
	The second bad decision taken in 1997 was the tax of a net £3 billion on pension funds imposed by the Chancellor of the Exchequer. Some of my colleagues call it a £5 billion impost, but in fact it was a £3 billion impost, and it was not the main cause of the problem in the pensions industry. In order, the causes were, first, increased longevity, which was not recognised by the actuarial profession, secondly, stock exchange weakness and, thirdly, the tax imposed by the Chancellor of the Exchequer. That led, however, to the closing of many final salary schemes, which in turn led to many people thinking that instead of saving through a pension, they could save through house values. They looked to house prices as a store of money, which, in due course, they could rely on to fund their standard of living in retirement. I am afraid that that will prove a very serious problem, because people in their 40s and 50s cannot begin to hope for the standard of living in retirement that many pensioners currently enjoy.
	Those were the mistakes of 1997, but things really began to go wrong in 2000, when the Chancellor of the Exchequer gave up on prudence and loosened the spending taps. Spending was up, and much of it was financed through stealth taxes—the definition of which is that they are concealed from individuals, who are not meant to notice them—which have a distorting effect on the economy. The weakness that was building up was masked by an extraordinary world tailwind of prosperity caused by globalisation. The prosperity of the Asian tiger economies, followed by the so-called BRIC economies—Brazil, Russia, India and China—combined with the benefits of globalisation, led to the symptoms of our problems being masked, and we did not realise how bad the situation was becoming.
	Even so, it became necessary for the Government to fudge the figures on the fiscal rules, which depend on the economic cycle. In July 2005, we were told that the cycle began in 1997, not 1999. In 2005, in the pre-Budget report, we were told that the cycle would end in 2008-09, not 2006. Later, in the 2006 pre-Budget report, we were told that the end date would be 2007, not 2008-09.
	The fiscal rules are intended to take into account the difference between generations. In the 1999 Budget, I think, the Chancellor defined what that meant: the Government do not pass on the costs of services consumed today to the taxpayers of the future—each generation is expected to meet the current cost of the public services from which they benefit. That is a laudable intention, but it does not work, and it is distorted by two factors. First, private finance initiatives are not taken into account in expenditure, and expenditure is treated as coming from future revenue, not current capital. Secondly, public sector pensions are largely unfunded, and that huge liability is also regarded as a duty of future revenue streams. In addition, Northern Rock is not included in public debt, and personal household debt in this country is 177 per cent. of disposable income—the highest in the world—which shows that there are problems to come.
	What do we do now? I am not an enthusiast for Government initiatives, but the situation surely needs a lead. My first principle is that this is no time for laissez-faire. My second principle is that initiatives must be on an international basis, so I welcome the international meetings taking place today. It is obvious that we cannot find our way out of this by ourselves, especially as the economy in this country is in a less good position to cope with the problems than those of many other countries. Therefore, we must have international co-operation.
	My third principle derives from what happened with Lloyd's of London, which I think is the nearest analogue to the present situation. I was very much involved in the Lloyd's of London rescue—I was one of the four members of the Lloyd's audit committee. What we did then was draw a line between bad and good assets, and I think that, somehow or other, the same needs to be done now. That is why I am so opposed to the Paulson plan in the United States. Henry Paulson proposed a £700 billion fund to buy toxic assets at more than their market value, thus pumping money into the banking system. I think that that is completely wrong, because it goes against the principle of moral hazard and also leads to the impression that there is a rescue fund of £700 billion.
	During the discussions on the Paulson plan, we heard many Congressmen say that they wanted some of the £700 billion for people in their constituencies. That is completely the wrong attitude. There is not a fund to be shared out; rather, there is pain to be shared. We must find ways of coming together and establishing how that pain can best be shared between those who can afford to share it and those who should bear it, because my next principle is that we must respect the importance of moral hazard—those who have taken the risk must bear a proportionately higher share of the pain.
	My fifth principle is that, as we all know, borrowing short and lending long is sustainable only if there is confidence. That confidence must be restored, and I see no reason why it should not be restored. There is much that is good in the economy—we must bear in mind that even Hitler could not stop the daffodils growing. What we must do, having cauterised the toxic elements, is move on, restore confidence and work with the good elements in the economy.

Mark Todd: The basic answer is that we need to act like grown-ups. Incidentally, the hon. Gentleman raises two points, to each of which I would give a different answer. I have a view about how trade deficits correct over time. We should debate in an adult way in this House an underlying trade deficit that lies relatively firmly under our control. I have no problem with the fact that there will be political disagreements about how we should tackle such a problem, but it is a subject that should at least be discussed properly so that we can attempt to agree our goal. It is not acceptable to run a budget deficit in a time of boom in the knowledge that it will not be corrected by any action taken in that time.
	I was disappointed by the tone of the hon. Member for Runnymede and Weybridge. He started off the debate as a pretty familiar bun fight, and he took the opportunity to kick the Government around, but there are plenty of past errors to be shared around. There is certainly no saintly Conservative past on which we can reflect. There is plenty of hindsight to be shared around, too. Few of us spotted the terrible events that we face. We had inklings of some of the problems, but not their scale or the direction from which some of them have come, so it ill behoves the hon. Gentleman to have been apparently so arrogant and wise on these matters.
	There is much more to be done in building consensus. By and large we have protected the independence of the Bank of England and the operation of the Monetary Policy Committee as an area of relative political consensus. There are some worrying signs—here I criticise the hon. Member for Twickenham, whose opinions I share on some matters—but generally speaking there is shared consensus on the merit of the decision taken and the discipline it has imposed. I wish we could extend that to more adult discussion of these matters, which is why I looked for more from the Opposition than I received this afternoon.

William Cash: I should put it on the record that I am not a great advocate of nationalisation. At present there is a severe crisis, but I am somewhat concerned that in all the BBC commentaries the argument tends to gravitate to the high street, banking and city element, all of which requires a great deal of intensive discussion, but not enough attention is given to the question of the way in which individual countries are running their own affairs. That is why I thought that the reference by my hon. Friend the Member for Runnymede and Weybridge to attempting to achieve a new financial stability framework is at least ensuring that we are moving the right direction, even if one has some reservations about certain aspects.
	I listened with interest to what the hon. Member for Twickenham said with regard to the NAO. The NAO, with all its expertise, must be given a specific role in relation to all this. The hon. Gentleman also referred to the inflexibility in how the Maastricht rules have been devised, and we still live with them. They were passed in 1993 and the stability and growth pact came along in 1996. That was an unmitigated disaster, and I said so at the time. A short time after the original proposals for the stability and growth pact were issued—the Chancellor of the Exchequer had written to all Members of Parliament to explain the matter because it was obviously important—I wrote to all Conservative Members saying:
	"If the stability pact comes into force member states would be forced to restrict their levels of borrowing. This would impose a fiscal inflexibility which, combined with a loss of monetary control and exchange rates, would severely diminish member states room for manoeuvre."
	That is where we are now. I went on:
	"The options for a country in recession would be extremely limited. It is not in the interests of the economic stability of the Community for member states to be helpless in the face of recession. Neither is it in the interests of political stability, for there would certainly be public unrest if a government found itself unable to respond to its peoples' calls for economic action."
	The UK has only the necessity to endeavour to subscribe to those rules, but the rest of Europe has to obey them. The plain fact is that they are not obeying them. There is no financial discipline. I have already given the levels of indebtedness and it is quite clear that the European Union is not working and that the rules that are supposed to be applied are not being applied. I happened also to point out in the letter that I thought that it was crazy to impose massive fines on countries that have got themselves into a situation of complete financial instability and have exceeded their budget deficit arrangements.

David Gauke: I take the hon. Gentleman's point and stand corrected. I assume, therefore, that 98 per cent. rates are merely a long-term aspiration, not an immediate objective.
	On looking back to the 1970s, my hon. Friend the Member for Gosport (Sir Peter Viggers) gave us an historical perspective, going back to the 1970s and the benefit of his experience in the commercial world, as well as his long-standing membership of this House. In a wide-ranging speech, he addressed a number of the substantial concerns as we address financial matters.
	The hon. Member for South Derbyshire (Mr. Todd) said that he could make a candid speech because he is leaving this House. As he is leaving the House, I can be candid about him: he made a characteristically thoughtful and balanced speech that raised a number of important points. I do not agree with everything that he said, but he looked back on the early years of this Labour Government, and the fiscal conservatism that existed then, with a fair degree of nostalgia. He was also open about the fiscal loosening that followed those early years. He raised an important point about corporation tax, which we are not concentrating on in this debate, and he raised fair questions about our proposal, which I hope to address during the debate.
	My hon. Friend the Member for Stone (Mr. Cash) highlighted the need for sound money and the high level of debt in many eurozone countries, and the instability that may follow from that. He also highlighted dangers with the stability and growth pact. He raised concerns that he has consistently raised in this House and outside for some years, and I expect that he will continue to do so.
	My hon. Friend the Member for Henley (John Howell) made a thoughtful and intelligent speech in which he outlined, from his extensive business experience, the need for a clear and honest framework, and he called for more rigour in our fiscal rules.
	The hon. Member for Great Grimsby (Mr. Mitchell) made a lively speech. I disagree with his premise—he is a long-standing advocate of Keynesian economics, and argues that as far as borrowing is concerned, the only rule should be that there are no rules. When he made the observation that he more or less went along with the Government's fiscal rules because they were "just a PR exercise", he hit the nail on the head, however.
	The hon. Gentleman also said that the rules will always be fiddled, which raises an important point that I hope to address in my later remarks. He questioned whether our plans were based on what occurred in New Zealand. Our precise proposals are not used anywhere—they are new—but within the document that we produced setting out the plans, we referred to the experience of Belgium, Denmark, Germany, Austria, the Netherlands, Sweden and the US. If we were remiss in not including New Zealand, perhaps we should look at the document again, but to clarify, our plans are not based on what is happening there.
	I would like to continue on a bipartisan note, and given the remarks of the hon. Member for Great Grimsby, I should say that by "bipartisan" I mean something on which my party and Government Front Benchers agree. It is vital that public finances are sustainable over the long term. There is a need for caution and prudence—at least that is professed position of Government Front Benchers. When the then Chancellor of the Exchequer addressed the House in his first Budget speech in 1997, he said:
	"Public finances must be sustainable over the long term. If they are not then it is the poor, the elderly, and those on fixed incomes who depend on public services that will suffer most."—[ Official Report, 2 July 1997; Vol. 297, c. 304.]
	The second point on which we agree with the position set out by the then Chancellor in 1997 is that there is a need for external discipline in order to reassure the public, the markets and Parliament itself that public finances will be run in a prudent manner. We agree that public finances must be sustainable in the long term and that an external discipline is needed to ensure prudent management. However—this is where the consensual tone ends—it is now clear that the Government have achieved neither an effective external discipline nor sustainable public finances.
	The then Chancellor's response to the need for sustainable public finances were his fiscal rules: the golden rule, which states that over the economic cycle the Government will borrow only to invest and that current spending will be met from taxation, and the sustainable investment rule, which states that public debt will be held at 40 per cent. of GDP. He put those rules at the very heart of his economic policy. He said that they were the
	"basis on which...people have seen this Government as competent"—
	words that are only too true.
	The issue is not only for academics. Fiscal sustainability matters to us all—to mortgage holders, who may face higher interest rates, to pensioners and others on fixed incomes fearful of higher inflation and to future generations, who will have to pay tax for what we borrow today. As Mervyn King, the Governor of the Bank of England, told the Treasury Committee last month:
	"The long-term risk is a fiscal framework that is not perceived by financial markets to be credible",
	which puts up
	"pressure on inflation expectations because it undermines the market's belief in the credibility of both the monetary and the fiscal framework".
	He continued:
	"And that will make our life more difficult if inflation expectations were to remain higher than we would wish".
	What of the then Chancellor's proposals? In 1997, he described the rules as providing a new discipline, openness and accountability. However, if they provide a new discipline, why do we have the highest borrowing figures for any major economy apart from Hungary, Egypt and Pakistan? If the rules provide financial discipline, why, according to the Institute for Fiscal Studies, have 19 out of 21 comparable industrial country Governments done more than the UK Government to improve their structural budget balances, and why have 16 of them done more to reduce their debt burdens? What sort of financial discipline is it that allows consistent borrowing in good years, leaving us nothing spare in the bad years? The International Monetary Fund, the European Commission, the OECD and just about every independent commentator advised the Government that their fiscal policy was reckless, and yet the fiscal rules did nothing to prevent that from happening.
	Have the rules provided more openness and accountability? The Government's assessment of their fiscal rules has been characterised by a litany of self-serving definitional changes, which invariably assist them in meeting their own rules. Dates of economic cycles have been altered and public sector contracts have been pushed off balance sheet.

Ian Taylor: I apologise to my hon. Friend for intervening twice. The simple fact is that anyone who was selling short in the city was borrowing stock in order to do so. Who was lending the stock? It was the pension funds and other so-called Labour-approved reputable trading bodies. I think we need a little less sanctimonious crap from Members opposite.

Chris Grayling: My hon. Friend makes his point succinctly. There will come a time when all the events that have taken place in the financial markets in the past few weeks will of course need to be addressed, but right now our duty as a House of Commons and as a nation is to seek stability in our economy and to take the steps that we need to take to protect jobs, to protect businesses and to ensure that can look after those who are unfortunate enough to lose their jobs. The other big step that the Government need to take to protect business and jobs is on tax. It cannot help employment prospects in this country if some of our biggest firms are transferring their headquarters and domiciles to other countries so that they can take advantage of favourable tax regimes in places such as Ireland. That cannot help the employment prospects of people in this country either. That is why we continue to argue that we need to cut the main rate of corporation tax from 28p to 25p and to reverse the Government's planned increase in the small companies rate from 20p to 22p. The costs of such a reform can be met by dramatically reducing the complex structure of allowances that the Government have introduced for business. We need a simpler and more attractive tax regime in this country that makes it attractive to do business here, that protects jobs and that attracts employers to this country in the future.
	I sincerely hope that unemployment does not rise as far and as fast as some are predicting.

Gerald Kaufman: I marvel that the Conservative party can even stage a debate on unemployment, and I marvel that the hon. Member for Epsom and Ewell (Chris Grayling) felt it possible to talk about the need to protect jobs. The Conservative party, when it was last in office, destroyed indigenous manufacturing industry in Britain: it destroyed the steel industry; it destroyed the motor car industry; it destroyed the shipbuilding industry; and it destroyed the extractive industries. The Conservatives left a wasteland that the present Government had to clear up and then build on.
	In my constituency, we had—I went to see Margaret Thatcher about it when it was in danger, to no avail—an electronics factory that manufactured multi-layer boards. That went under, and it is now a blood transfusion centre. That is one of the legacies of the Conservative party in the Gorton constituency of Manchester. It created a wasteland in which the Gorton constituency was No. 1 in Great Britain for long-term unemployment and No. 1 in England for youth unemployment. We are still above the national average, but the situation in my constituency has been transformed since the Labour Government came to office.
	How has the situation been transformed? One of the first things that the Government did when they came to office was to sign up to the social chapter, which the Conservative party said would be ruinous to the country. When we introduced the new deal, the Tory party voted against it in the House. We financed the start of the new deal by the windfall tax, and both the Tory party and the Liberal Democrats voted against the windfall tax when my right hon. Friend the Prime Minister introduced it.
	The hon. Member for Cardiff, Central (Jenny Willott) has said that it would be dangerous to increase the national minimum wage at this point. In fact, the national minimum wage is being increased at this point. When our Government, when they first came to office, decided to introduce the national minimum wage, the Conservative party, with its spokesman, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), said that introducing a minimum wage would increase unemployment. In fact, the national minimum wage, rising regularly and periodically as a result of the Government's decisions, has not only reduced unemployment, but given workers a self-respect that they did not have before.
	I had a constituent who, during the period of Conservative Government, came to tell me that his employer—he was a security guard—had increased his working hours from 64 hours to 72 hours alternating, reduced his hourly wage and, what is more, would not pay him overtime. I wrote to the Secretary of State for Employment in the Conservative Government asking her what my constituent could do in those fraught circumstances. She very kindly wrote back to me and said that it was open to him to resign his job. He would, of course, have lost any redundancy benefits, if he had done so. That would not be possible now. Under the social chapter, that man could not be forced to work those hours, and his pay would be protected against the most rapacious employer under the national minimum wage. The present Government have not simply reduced unemployment and increased employment availability to the highest level that this country has ever known, but made it impossible for workers to be treated like serfs, as they were under the Conservative Government.
	The projects continue. Even over the past month, two new projects have opened in my constituency, both as a result of Government policies. We have the new east Manchester construction centre, in which people, which includes not only young people but men and women, are being trained in construction skills such as kitchen and bathroom fitting, plastering, carpentry and joining, and general construction operations. The centre is funded largely by the Government through the Northwest Development Agency, the new deal for communities and the learning and skills council.
	The head of Manchester college, which is involved in the project, made a speech at the opening, which I attended, in which he said that before 1997 the only money that his college was given for job creation projects was £1 million to demolish a building. Now it has been given £50 million for employment projects. Those employment projects are not simply reducing unemployment in the Gorton constituency, but giving people skills, so that they can get better jobs and not be ground down and obliged to take the only job available.
	A couple of weeks ago, I attended a graduation ceremony in Gorton monastery, about which I spoke the other day, of people about to be employed in the huge new Tesco that is to open in Gorton later this month. They had an eight-week training period—130 people deliberately and specifically chosen by Tesco in co-operation with Jobcentre Plus, the learning and skills council and Sure Start. I do not know how the Tory party has the nerve to talk about child poverty when it opposed and jeered at Sure Start, which is one of the greatest of a series of projects in my constituency. The Tesco project is exactly what we want in this country today—private enterprise joining with Government and public agencies, including the excellent Manchester city council, in order to provide people with jobs.
	When I attended an address at the graduation ceremony for Tesco, I was moved by the way in which people reacted to the opportunities that they have been given. A middle-aged woman said that she had her self-respect back again. That kind of thing is happening only because we have a Labour Government who are carrying out policies based on not some kind of blanket funding, but a one-to-one project. That is the merit of Jobcentre Plus, the new deal and the kind of projects that I have been talking about.
	Those are not the only projects that are proceeding. The Minister of State, Ministry of Justice, my right hon. Friend the Member for Delyn (Mr. Hanson) came to Gorton a few months ago to deal with bringing offenders back into paid employment, which is again a Government project joining with private agencies. That is the kind of thing that the Government are doing.
	I am proud of this Labour Government. I am well aware that a great deal more needs to be done. In my constituency, we are part of east Manchester regeneration, which would not be possible without the Labour Government and Manchester city council. My right hon. Friend the Prime Minister came to my constituency a couple of weeks ago and opened a £47 million high school that is better than anything in Europe. That was only possible because of Labour Government policies, and, of course, it provided a huge amount of employment for local workers.
	The Government have a record that will stand up against anything that I have experienced in my years in the House of Commons. Yes, there is a lot more to be done, and yes, of course, there is huge concern about how the current global crisis will affect employment. I was interested to listen to the hon. Member for Epsom and Ewell offering a solution to the global crisis—it was a bit different from the solution offered by the shadow Chancellor yesterday, but no doubt when the Leader of the Opposition speaks tomorrow he will offer yet a third solution to the global crisis.
	What we have in this country today is far from perfection, but it is very, very much better than anything that my constituents have experienced since I was a Minister and did such good things for them. I do not criticise the hon. Member for Epsom and Ewell—he has a job to do and he did it quite nicely—but it is just that it was totally incredible.

Nigel Griffiths: He certainly did say that.
	Those are their values, not ours. It was their choice, not ours. It was their 3 million on the dole. Our choice was to help to create 3 million more jobs than there were in 1997, putting more people in work than at any time in our history. It was this Government's choice to give the UK one of the highest employment rates of any advanced manufacturing country—it is higher today than that of France, Italy, Germany, Japan or even the United States of America. So far this year, every weekday, 10,000 new vacancies have been posted. With 600,000 vacancies, 90 per cent. of those losing their jobs and seeking another one find work within a year, while 80 per cent. find one within six months.
	This motion was tabled by the party that regrets rien and labels as unemployed parents with very young children, the most severely disabled people, carers of disabled children and frail elderly people and the bereaved. Doubtless, the Opposition think that they should pick up their spirits and get on their bikes. Those are the very people—the disabled and others—that the Opposition pretended to care about in their welfare reform proposals of 27 May, when the hon. Member for Epsom and Ewell (Chris Grayling) claimed that they would be exempt. But now, just four months later, here in the House, the Opposition have counted them in, as we knew they always would.
	The task of Government is to tap into the talents of every citizen. That is what the record number of university and college places is about, and it is why we have more than tripled the numbers of apprenticeships. Let us remember that other Tory legacy: 75,000 apprenticeships in 1996-97. Now there are 255,000, with 70,000 alone in manufacturing. But it does not stop there. This Government are committed to ensuring that every 17 and 18-year-old has an apprenticeship, a college education or skilled schooling to allow them to maximise their potential. And it does not stop at that either. We are committed to the £1 billion Train to Gain programme, which will allow businesses to invest in the training and retraining of their work force to meet the skills challenges all businesses face.
	There must be no return to the mass unemployment, despair and poverty that ravished many communities in the 1980s and 1990s. For this country to ride out these economic storms, and for us to prosper in the decades to come, we must tap into the talents of every person in every part of this country. As a nation, we cannot afford to neglect the talents of anyone, regardless of race, creed, ability or disability. That is the path we must choose.

David Davies: One of the reasons for that is the cost of the renewables obligation commitments, which is being put back on to the customer. The rate of unemployment looks so low because many people are on sickness benefits, and many people have extra jobs is because they came here from abroad.

Alan Duncan: Our debate this evening takes place against the backdrop of increasingly serious economic difficulty. Over the past few weeks, we have seen great turmoil in financial markets, and Members on both sides of the House share concern that it risks turning into turmoil in labour markets. Unemployment is a scourge. We have to work together across the House to confront enormous economic difficulties, which none of us can wholly understand, to try to do our best to ensure that they do not turn into the unemployment and human misery that the debate is all about.
	I am afraid that by the end of tonight's proceedings, we will all have painted a rather depressing picture of what might be coming down the track at us. When it comes to the problems that we want to confront, the starting point is not really one of which the Government can be proud. It is not a proud boast that after 10 or more years of economic prosperity, unemployment stands at "only" 1.7 million. Let us compare that with the situation in many of the years that speakers have mentioned tonight; it is triple what was seen as an absolutely unacceptable level of unemployment in the 1970s. The starting point is not a happy one, which means that what will follow may be extremely serious.
	The climate for future employment is not healthy, and one reason why is that after the 10 years to which I have referred, our economy and fiscal position should be in a much better position to cope. We should now have lower taxation. Instead of Government borrowing, we should have a surplus. We should have higher savings and a massive pensions pot. Sadly, we have none of those things, and in my view, unemployment is relatively high. We have higher taxes, more regulation and the worst budget deficit in the developed world. We have squandered a decade of growth, and that will make the pain far greater when we have to face what is around the corner.
	We have had a lively debate. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) began the Back-Bench speeches and spoke in his inimitable style. I thought that he showed insufficient appreciation of the ferocity of the business cycle—a ferocity that his constituents will yet have to withstand. My hon. Friend the Member for North Thanet (Mr. Gale) spoke about jobcentre closures. He also mentioned empty property rates, which I shall come on to in a minute. I thought that the hon. Member for Edinburgh, South (Nigel Griffiths) was unduly vitriolic, and looked only to the past. Our concern tonight is about the future.
	My hon. Friend the Member for Harwich (Mr. Carswell) was especially convincing on the Prime Minister's view on immigrant workers, but the victor ludorum tonight is the hon. Member for Livingston (Mr. Devine), who is temporarily out of the Chamber—it is certainly a brave man who becomes his psychiatrist. The mistake that he made, when levelling accusations against us, was insufficiently to appreciate the fact that so many of the problems of the '80s—high tax, inflation, underinvestment, restrictive practices and loss of competitiveness—were caused by what had gone before. I am not sure whether the Secretary of State was even born then, but he can always turn to the history books.
	My hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb) proved that Labour's monopoly of concern is not safe in its hands. The hon. Member for Ynys Môn (Albert Owen)—I am sorry that I missed a bit of his speech—was, once again, looking back. My hon. Friend the Member for Wellingborough (Mr. Bone) showed a rather more accurate grasp of history. The hon. Member for Glasgow, South-West (Mr. Davidson), once he had decomplexified everything, showed a much greater sense of realism, which he injected into our debate.
	I am the Conservative spokesman for the Department for business. It is vital that the UK has a strong business centre, and that Whitehall speaks up strongly for business, if we are to counter the scourge of inflation. I fear that the Department for Business, Enterprise and Regulatory Reform, whose Ministers I face across the Chamber, has not done as well as it could have done over the past 10 years. There have been 38 Ministers and seven Secretaries of State, and the Minister with responsibility for small firms has changed on average once every 18 months. The construction portfolio alone has changed six times since 2001. We are talking about the Department that needs to oversee all the economic activity that ultimately gives us all our wealth, which all other Departments then spend.
	Unfortunately, I will not even be able to face my opposite number across the Floor of the House. For these few days, until he is duly ennobled, I can accurately call him Mr. Mandelson. It is a great pity that I will not face anyone of Cabinet rank across the Dispatch Box. When we had a Cabinet Minister in the Lords, be it Lord Carrington or Lord Young, there was always a Member of this House of Cabinet rank whose voice in Cabinet from the Commons would always be there, but we do not have that under the future Lord Mandelson.

Rob Marris: I will be brief. I assure the hon. Gentleman that the Minister of State, Department for Business, Enterprise and Regulatory Reform, the hon. Member for Wolverhampton, South-East (Mr. McFadden) is a fine parliamentarian who will do a fine job speaking for the Government.

Tony McNulty: The jokes might be fun, but they are made at the expense of the Opposition, because at this time of all times in this place, with all that is going on in the broader country, all we have heard from the man who purports to speak for the Opposition on business is that there should be less borrowing, less taxation and less regulation. Conservative Members should run away and turn their televisions on. At this moment of all moments, borrowing and taxation equal public expenditure, the very public expenditure that we shall use here and elsewhere to lessen the impact of any slowdown. Given his contribution, the Opposition spokesman cannot be taken seriously.
	Yesterday, a senior member of the Tory Front Bench said:
	"Families are deeply worried about their savings, their homes and their jobs, and it is up to us to try to work together to get the country through this current crisis. I do not think that the British public would thank us if they saw happening here in this House of Commons what everyone saw happening in the American Congress. That is why we offer to look constructively at any proposals brought forward by the British Government."—[ Official Report, 6 October 2008; Vol. 480, c. 23.]
	I fully endorse that. We have had nothing in that spirit from either the hon. Member for Epsom and Ewell (Chris Grayling) or the hon. Member for Rutland and Melton (Alan Duncan). They could have been consensual. They claim to be consensual on the issue of unemployment and welfare reform.  [Interruption.] With the greatest respect, I thought that I might speak to the motion and our amendment rather than take a back-of-a-cigarette-packet approach. They could have recognised that intervention is essential, as my right hon. Friend the Secretary of State for Work and Pensions said. They could have said that a lot has been done to great effect over the past 10 years in assisting those currently and previously unemployed. They could have headlined that they will keep up the pressure on us to ensure that the pace of welfare reform is greater not lesser. They did none of that. Instead, we heard a complete dismissal from the hon. Gentleman of all that Jobcentre Plus has done for so many of our communities throughout this country over the years; work that means that whatever the severity of any forthcoming slowdown we are better placed than we have ever been to help and assist those who are unemployed for however long. For it to be so glibly dismissed by the hon. Gentlemen defies belief.
	I do not claim a monopoly of concern about unemployment and I accept that there is no such monopoly among Labour Members, but it would be hard to credit Opposition spokesmen with that from their speeches, which is a shame. Among other things they could have apologised for, as so many of my right hon. and hon. Friends have so eloquently put it, was the scandalous waste of human talent in the '80s and '90s when the Conservatives were in charge, when there was no intervention of any substance to assist the unemployed and no conditionality, and when there was precisely the fiddling of figures that is the charge falsely laid against us at this stage. They could have apologised for putting so many of our people and communities on the proverbial scrapheap, causing heartbreak and destruction.

Gordon Marsden: I am delighted to welcome my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) to his new position of Minister with responsibility for disabled people and to wish him well in that post.
	Supporting people with disabilities to obtain useful and satisfying employment and to remain and, hopefully, progress in it is rightly an issue that commands great public interest and cross-party support. One such long-standing initiative has been the supported employment placement scheme, currently known as Workstep, whereby funding from Government—in this case the Department for Work and Pensions—is matched by a host employer. Among the local authorities who have taken part in this scheme has been my own, Blackpool council, which is Conservative controlled and whose adult social care and housing department has been responsible for administering it.
	The factsheet from Blackpool council issued in August 2007 stated:
	"Workstep recognises that disabled people often face complex barriers in finding and/or keeping a job...Workstep is for you if you are disabled as defined by the Disability Discrimination Act 1995...once the right job has been identified, you will receive ongoing support and advice to help you continue in your job and develop your skills and abilities."
	Unfortunately, the sequence of events that I have to relate tonight strongly suggests that for some of the people on Blackpool's Workstep scheme those supportive words have not been lived up to. Blackpool council initiated a process at the end of April this year that led to five months of pressure, anxiety and uncertainty for the people concerned and their families and friends.
	At that time, Blackpool had 30 people on the Workstep scheme, of whom 11 held contracts with Blackpool council but were placed with host employers. A number of the Workstep employees had been in long-term employment with host employers—hard-working and dedicated to the jobs they were doing, which provided them with self-esteem and financial stability. However, suddenly, without prior warning or consultation, those people were told that Blackpool council had reviewed Workstep scheme. The 11 who were contractually employed by Blackpool council but who—in the rather cold words of the note that was issued to them by the social care department—
	"provide work to another organisation"
	were told, along with their employers, that the council would no longer support the scheme as previously operated. As a result, I was contacted by family and representatives of two of the people affected, who were my constituents, and subsequently by an employer in my constituency of a third person. All those people had been left concerned and bewildered by not only what had been proposed, but the manner in which it had been presented.
	The "Changes to Workstep—Employee Information" document, which was read to one of my constituents at a meeting organised by Blackpool council's adult social care department on 22 May, said:
	"It has been identified that it is not financially viable for Blackpool Council to be paying, or partly paying individuals who do not provide work for the Council. We need to make 2 per cent. savings across the Council. Many senior management posts were made redundant last year, but more savings are required. The money paid out by the Council to support this scheme is greater than the money brought in. Unfortunately the Council cannot support the scheme in this way any longer.
	We have already spoken to your host employer about this and have asked them to consider if they will take you as an employee with their organisation, with a new contract of employments and on their terms and conditions. If the host employer agrees to offer you a position and you do accept, you will need to resign from your position at Blackpool Council. If this does not happen you will be at risk of redundancy."
	The note to employers gave a similar financial reason for changing the scheme but added that
	"as the individual has been working with you for such a long time and is trained and experienced in the role they have been undertaking, we would like you to consider appointing the individual. We are allowing discussions until the end of May. If agreement cannot be made about appointing the individual to your terms and conditions, our plan is to issue 12 weeks notice that the individuals are at risk of redundancy."
	I am not going to name in this House tonight the individuals about whom I was contacted—they have been put through enough pressure by these events—but it is worth quoting what one of them said about these notes at a subsequent meeting between him, his family and advisers, the host employer and officials of Blackpool's social care department to discuss the situation. They said:
	"I enjoy working here...with wonderful caring colleagues and have no desire to work anywhere else...the wording of this made me feel like I was a bag of rubbish waiting for the bin men to collect. I thought it was very sharp and impersonal. I feel like just a number being disposed of."
	In the wake of those concerns and complaints, I wrote on 20 May to Steve Pullan, the executive director for adult social care at Blackpool council, who had initiated the process to alter the position of these Workstep employees, asking him why the council proposed to terminate their contracts. What had further disturbed me since being made aware of the proposals was that conversations between my Westminster office and the contract provision delivery team of the Minister's own Department had confirmed that despite the funding provided to Blackpool council for the Workstep scheme by the Department—some £400 a month per employee—the council did not consult the Department's officials or, as far as I am aware, Jobcentre Plus, before acting unilaterally. Nor did it discuss the possibility of transitional arrangements to ease the stress and turbulence with which these employees were now threatened.
	I asked about the motivation for acting now, given that the Department had not altered its national funding or criteria, and the next national review of Workstep was not due until late 2009. The letter that I received back from Mr. Pullan did not address the financial issue but said instead, rather disingenuously, that as the Workstep contract
	"has an end date in 2009, we thought it worthwhile to look and plan ahead."
	He admitted:
	"These people have been with the host employers for many years"
	but said that since Workstep was designed to encourage progression and as
	"the group of 111 mentioned above had not moved onto secure employment with the host we have actively reviewed the situation."
	My two constituents have worked with their host employers for about 20 years each—indeed the original placements were made via Lancashire county council, from which Blackpool council inherited responsibility for their contracts when the Blackpool authority became a unitary one 10 years ago. Why, therefore, had Blackpool council waited until now to decide that it needed to be moved on to encourage progression? It is perhaps not surprising that when comparing the reasons given in the notice that the adult and social care department issued with those given to me by Mr. Pullan in his reply to me, the relative of one of those affected said in an e-mail to him that
	"the clear shift of emphasis from efficiencies to forward planning is puzzling and disingenuous."
	What is equally puzzling is that, only five days after I had received my letter from Mr. Pullan, an e-mail sent by another council official to the employer, who had also queried the reasons and timing for the changes, said that
	"this decision has been made both on financial grounds and in order to deliver the objectives of the Workstep Scheme."
	The employer challenged the council about why
	"this just came out of the blue—if the scheme migrated and changed over the years you should have been in contact with both (the employee) and (us) so that a scheduled plan could have been put together".
	The official replied that
	"you are correct in stating that we could have taken these steps any time since 1998!"
	The council has continued to deny any financial motives for its actions, and, indeed, at a meeting with me last week Mr. Pullan again sought to insist that his junior officials had misunderstood the situation in their written explanations—but to do so not once but twice, in writing, looks at the very least, to echo Lady Bracknell, like carelessness.
	My meeting with Mr. Pullan came only after four months and two further letters from me both to Mr. Pullan and to Councillor Lily Henderson, the cabinet member with responsibility for his department's administration of Workstep, in which I questioned whether the council's actions were not against the spirit and possibly the letter both of equality and disability legislation, and also the Government's partnership with local authorities on Workstep. As well as being very slow to respond to direct questions from me and representatives of my constituents, the council has been evasive as well as insensitive in not appreciating how it has turned the lives of vulnerable people upside down more than a year in advance of a national review—as well as running the risk that because host employers had been placed under an unreasonable deadline, these people would end up redundant and demoralised.
	The fact that these issues have dragged on over the summer has exacerbated the situation. I have discovered that the assessments that were supposed to take place for employees to access their potential for progression were, at least in some cases, never properly carried out. I am disappointed that, despite both Councillor Henderson and Steve Pullan being made aware of the human impact of this situation, they failed to act urgently to relieve it.
	I have known one of my affected constituents and his family for 10 years. At the end of July, I visited him and his elderly mother in their home, where she was increasingly house-bound and where he had taken on increasing caring responsibilities. It was clear that they were both very upset and stressed at the threat to his job, and a note sent from the council's own occupational health doctor to the host employer over the summer confirmed that. Sadly, on 1 September, my constituent's mother died and since then he has been on sick leave. He is keen to return to work, but his doctor has advised against it at present. On 25 September, two women representatives of Blackpool council called on him and told him that the
	"redundancy steps were still in force and could be acted upon at a time of their choosing".
	The money saved by Blackpool council by abandoning its contractual obligations and top-up funding would, as Mr. Pullan has admitted to me, be comparatively meagre—probably less than £30,000 if enacted for all 11 employees. After all, the overwhelming proportion of the money comes not from the council but from employers, and the Government. Blackpool council is Conservative controlled, but I am pleased to report that my constituents' cases have been robustly supported by their individual councillors from both sides of the council, and I pay tribute to the strong advocacy by Labour councillor Fred Jackson and Conservative councillor Jim Holdsworth. I appreciate also the involvement of the council's chief executive, Steve Weaver, in trying to achieve closure on some of these issues. But even now the situation remains uncertain and not properly resolved.
	Mr. Pullan tells me that seven of the 11 individuals have now been transferred to host employers, but of course their salaries and terms and conditions are not guaranteed to be the same as they were. Of the other four, the gentleman who lost his mother is still at risk of redundancy. In one case, the council appears to have reversed its position and guaranteed employment until 2009, but whether that will be via the existing contract or by transfer to the host employer is still not clear. My office was told by the employer in my constituency that his employee was made redundant by the council, paid redundancy money and then re-employed by the host employer. When I raised this at my meeting with Mr. Pullan, he was unaware of the situation and I am now waiting for clarification.
	After all the inconsistencies and unequal outcomes that Blackpool council has produced, the decisions still appear to have been taken without any consultation with the Government or its agencies. In addition, the upheaval on which Mr. Pullan embarked and in which Councillor Henderson colluded ignored the overall context in which local authorities as providers of Workstep are obliged to operate in return for being funded by the Government.
	The Minister's predecessor—my hon. Friend the Member for Stirling (Mrs. McGuire), to whom I pay tribute for her commitment and advocacy as Minister with responsibility for disabled people—made that very clear in her letter to me in July after I had discussed Blackpool council's proposed action with her. She said that there was:
	"clear recognition that some individuals will require long-term support in work, possibly for the whole of their working lives. In these cases Workstep providers should continue to provide support for as long as the customers require it. I feel it would be wrong for a provider to put pressure on any individual if they are not in a position to progress, or if it puts their current employment position at risk. This is clearly contrary to the overall aims of the programme."

Joan Humble: Is my hon. Friend aware that the recent consultation document on the Government's their welfare to work strategy talks clearly about empowering people with disability, listening to people with disability and supporting people with disability in getting into work and while they are in work? Does he agree that in this instance our local authority has failed to do any of that and that it owes an explanation to the individuals concerned in the cases that he has outlined and to the Government?

Gordon Marsden: I agree absolutely with my hon. Friend on those points. Sadly, I am afraid that the way in which Mr. Pullan and Councillor Henderson have proceeded has caused these sorts of problems.
	The Government have made their commitment to the principles of Workstep and any continuing successor programmes beyond 2009 clear, both in the letter I received from the former Minister and in comments made in the House of Lords on 21 July by the Department of Work and Pensions Minister, the noble Lord McKenzie of Luton. Blackpool council should also now make that commitment as well as giving an undertaking to make sure that progression, assessment and support issues for disabled people with supportive employment are properly and professionally handled in future. At a time when the ruling Conservative cabinet of Blackpool council is keen to be seen to be promoting new equality initiatives, it should do no less if it aspires to be taken seriously about supporting disabled people. That might be some compensation for those who have been put through the wringer by the way in which Blackpool council has mishandled its stewardship of the Workstep scheme for the people it held under contract, to whom it owed a duty of care.